California adjustments: U.S. obligations exempt-interest dividends transferred from your federal return

[jhbrown42]

I'm doing CA adjustments, and TT asks me about "U.S. obligations exempt-interest dividends of $801 transferred from your federal return".  Here's the problem, I don't know where that $801 number comes from.  I can't find it anywhere on my federal return.  The only place I find it (I "printed" my return (all worksheets) to PDF and searched) is in the California return.  I've looked at my 1099s that show exempt interest from U.S. obligations and there aren't any numbers that add up to $801.  Not even close.

I understand the tax issue behind the question of "50% or more invested in CA/US obligations".  But how can I answer that question if I don't know what funds the program is asking about?

Where can I find where that number comes from?

[baldietax]

Check 1099s - this number will be coming from 1099-INT Box 3 less Box 12, 1099-OID Box 8 less Box 6, or 1099-DIV Box 1a amount of US Government Obligations you have to calculate and input that $ amount as a supplemental question after the 1099-DIV box inputs.  If it's referring to dividends presumably it's referring to a 1099-DIV.

I don't know why it's not an amount you recognize, re "I've looked at my 1099s that show exempt interest from U.S. obligations" - can you clarify what you are looking at?

[jhbrown42]

I have several 1099-INTs with no exempt interest.  I'm ignoring those.  I have two 1099s as PDFs which have INT, DIV, B, and OID sections.  Those are the ones I'm searching.  I have no amounts in any OID section.  One of the 1099s has no exempt interest or dividends.  The other does.  1099-INT Box 12 is 0, and 1099-INT Box 3 is over $10k.  So  1099-INT Box 3 less Box 12 is way bigger than $801.  1099-OID Box 8 less Box 6 is 0.  1099-DIV Box 1a is "Total Ordinary Dividends", and is way bigger than $801, and it's from dividends that are not US or CA and are not exempt, so I don't see how that number is relevant.  1099-INT Box 8 ("Tax-Exempt Interest") is $337.50.  That's from a CA muni bond.  My 1099-DIV Box 12 ("Exempt Interest Dividends") is $3,346.95.  That's from a CA muni bond fund.  So those are the numbers I'm looking at.
There is one weird clue, maybe.  When I search the "printed" PDF of my whole return, the $801 appears first as a subtraction on the CA Adjustments Form, Part 1, Section A, Line 3 ("Ordinary Dividends").  That seems to be mixing Ordinary Dividends with US Obligations?  Then it appears twice on the Interest and Dividend Adjustments Worksheet, Line 16 and the total.  Then it appears on the "Interest and Dividend Adjustments Wks -- Smart Worksheet" as "U.S. obligations exempt-interest dividends from the federal return".  Which seems to be the root of the problem.  That $801 is getting transferred from the federal return, but from where?

[AmyC]

1099-DIV box 1a contains all ordinary dividends. Those dividends include the qualified, the US government interest, nonqualified, everything.

As you go through the federal 1099-DIV entry, you are asked to break out exempt dividends and US government obligations not taxed in CA. I believe you did as the program asked and it is pulling over to the state, as intended.

Your supplemental pages will tell you the % of US Obligations or may even give you the amount by state.

Next steps:

• Your 1099-DIV worksheet  - shows what you have entered in the DIV section. In the CA section, I wonder if you added the amount a second time in CA not realizing the program was pulling over from the federal entry. 
• Review your federal 1099-DIV entry 
• Review CA dividends interview.

Caution:

California has a strict rule: You can only subtract those U.S. obligation dividends if at least 50% of the fund’s assets were invested in U.S. obligations at each quarter-end.

• If your fund only had 10% in U.S. Treasuries, that $801 deduction is actually not allowed in California.
• The software is asking you this to verify if that $801 "transfer" is valid. If the fund doesn't meet the 50% threshold, you should technically adjust that number to $0 in the CA interview.

[jhbrown42]

Thank you.  Those numbers weren't on my 1099s.  But if I totaled up the "U.S. government interest, if any, included in box 1a" from all the 1099-DIV worksheets, that added up to $801.  So as you said, it came from me looking up how much of the interest from my government money market funds was from the U.S. government.  Since one of those funds was less than 50%, I now know how to adjust the adjustment.
Gotta say though, that it would help if the program explained it a little better.